Wooster city tax isn't doing the job

Last year marked the first time in four years the cost of providing safety services exceeded the amount of money brought in by Wooster's 1 percent income tax.

That is now an economic reality the city will wrestle with for at least the next five years, according to 2001 budget projections.

In 2000, Wooster spent $8.6 million to provide police and fire protection to its residents, while collecting $8.3 million in income tax.

This year, the city's income tax will bring in $7.97 million, about $320,000 less than last year, the result of about 300 management level jobs lost during two corporate mergers two years ago. Meanwhile, the cost of providing safety services this year will remain relatively the same.

Those numbers, along with approximate 3 percent cost of living increases, are projected for the next five years.

"The income tax appears to be stabilizing rather than growing given the fact that we had a permanent shift in the local economy because of those corporate mergers," said Jim Pyers, Wooster's finance director. "Fortunately, council had in the past set in place adequate resources to take care of a transition period.

"We've been through economic cycles before, and we have lost corporations before. We lost at one time Annats and Regal Ware, and that also had an effect on the economy. However, I think we're better prepared for the transition because of council."

In 1994, council approved legislation that requires the city to maintain 60 to 120 days in cash in the general fund. That legislation was amended last year to require the city to maintain 60 to 240 days in cash.

Wooster has about 153 days in cash on hand. If council approves the 2001 budget, which has expenditures exceeding revenues by $344,065, the days in cash would drop to 112 days, according to Councilwoman Barbara Hustwit, D-Ward 2.

Pyers admits if revenues do not increase, the city's finances could be in trouble. Still, he says it's not time to overreact.

"We have to keep this in perspective," he said. "While $300,000 tightened the budgetary process, $300,000 out of a governmental fund budget that has revenues of $17.6 million, that's just an adjustment.

"The trend needs to be reversed, but it's definitely not time to overreact."

Michael Sigg, Wooster's administration director, believes 2001 should be a year in which the city seeks ways to bolster other forms of revenue.

"It has to be made up in other areas," Sigg said. "We believe we need to take a look not only at expenditures but also our revenue policy. There are just not a lot of places to simply cut expenses unless we decide to really reduce services."

Pyers said the city will benefit from the construction of TekFor Inc. and other manufacturers that will eventually locate in the Long Road industrial park. One year after completion, TekFor employees will pay about $14,000 to the city in income tax, he said. That number jumps to $50,000 after three years.

Still, those jobs, along with those created when other companies locate in Wooster, will likely never make up for the 300 management level jobs lost two years ago.

"We definitely need the expansion of companies and the growth of companies," Pyers said. "But the management positions that are no longer here in Wooster were compensated at such a level that it probably takes four to five employees to replace one management person.

"If we lost 300 management people, we would need about 1,500 employees to generate the same type of income. The problem with that, if we bring 1,500 employees into the city, we are probably going to need more police, fire, recreation, more streets. We have to balance this and be careful how we do this."